Music Sales Hit Sour Note

The Recording Industry Association of America (RIAA) is blaming online piracy and CD burning as the major culprits for a 10.3 percent slide in 2001 music sales. According to RIAA data, total U.S. shipments dropped from 1.08 billion units shipped in 2000 to 968.58 million in 2001. The dollar value of all music product shipments decreased from $14.3 billion in 2000 to $13.7 billion in 2001 -- a 4.1 percent decrease.

The Washington, D.C.-based RIAA, the principal trade association for the music industry, also released recent survey findings that showed 23 percent of music consumers said that they did not buy more music in 2001 because they downloaded or copied most of their music for free.
Commissioned by the RIAA and conducted by Peter Hart Research Associates, the survey contacted 2,225 music consumers between the ages of 12-54.
In the 2001 survey, over 50 percent of those music fans that have downloaded music for free have made copies of it. Just two years ago, only 13 percent copied it onto a portable device or a CD burner.

Coinciding with the increase in copying music, the study found that ownership of CD burners has nearly tripled since 1999: in 2001, two in five music consumers owned a CD burner compared to 14 percent who owned one in 1999.
"This past year was a difficult year in the recording industry, and there is no simple explanation for the decrease in sales. The economy was slow and 9/11 interrupted the fourth quarter plans, but, a large factor contributing to the decrease in overall shipments last year is online piracy and CD-burning," said Hilary Rosen, president and chief executive officer of the RIAA. "When 23 percent of surveyed music consumers say they are not buying more music because they are downloading or copying their music for free, we cannot ignore the impact on the marketplace."
Other RIAA findings included:

Full-length CD units dropped 6.4 percent in 2001, representing a $12.9 billion dollar value within the market and a 2.3 percent decrease in dollar value from 2000. Additionally, CDs continue to be the format of choice among consumers. Whereas CDs represented 87 percent of units shipped to U.S. markets in 2000, CDs represented 91 percent of all units shipped in 2001 ;
The DVD music video has shown its continued popularity with a 138 percent increase to 7.9 million units shipped in 2001. DVD music video represented a $190 million market in 2001, an increase of 137 percent from $80.9 million market in 2000;
Cassette units shipped to U.S. markets decreased by 40 percent in 2001, representing a $363 million dollar value. This represents a 41.9 percent decrease from 2000; and
In 2001, close to 2.3 million LP units were shipped to U.S. markets, an increase of 3.7 percent over the 2.2 million units shipped in 2000. In 2001, the LP format represented a $27.4 million dollar value.

The RIAAs year-end numbers, which are compiled quarterly by the accounting firm of PricewaterhouseCoopers LLP, represent direct data from companies that distribute approximately 90 percent of the pre-recorded music in the United States. To calculate unit shipments and dollar values for the remainder of the market, PricewaterhouseCoopers utilizes retail sales data from SoundScan to estimate shipments by non-reporting companies.